In conversations I have had with people
regarding real estate in this area, I have often
found that the topic of property taxes is not
very well understood. In a nutshell, here is the
equation (with added explanations) of how
property taxes are calculated:
One big (and very good!)
question I often hear is:
Why, within
different subdivisions of the same
large residential development, are
property taxes so different?
Answer:
Two major factors may come into
play here:
1) “Save Our Homes” (SOH)
- a constitutional benefit approved
by Florida voters in 1992 – places a
3% limitation on annual
assessment increases on
Homestead properties. So, for
Homestead properties, the assessed
value (for taxation purposes) will
not increase more than 3% each year
(or the percentage change in the
Consumer Price Index, whichever is
less).
2) Homesteadis
another constitutional benefit. It
allows for a $25,000 exemption
(deduction) from the assessed value
of your real property if you use it
as your primary residence.
(Additional exemptions are available
for widows/widowers, the legally
blind and the disabled. See link at
end of text.)
So, let’s say a home was
purchased 10 years ago and the
homeowners applied for and were
granted Homestead. Normally, the
assessed value (for taxation
purposes) on that home would not
have been increased more than 3%
annually, in accordance with SOH
(above). If this home
were
now sold, then the tax amount would
change to reflect the current fair
market/just value of the property
(because the old owner is out of
there, and the old SOH situation has
ended). A new fair market/just
value assessment will become the
base value for “SOH” purposes for
the new owner/homestead applicant.
A similar situation would exist
with properties built in a new
subdivision of an existing
residential community. Homeowners
with homestead exemption(s) who have
been in the community for years are
probably paying much lower tax
amounts than their new neighbors in
the new subdivision. Why? Because
SOH put a cap on how much
their property taxes increased
annually, even when prices for new
homes (and/or resales) jumped
dramatically (as we have seen).
So, if you’re purchasing real
property in Florida and can make it
your primary residence, you
definitely want to apply for
Homestead. Save Our Homes (SOH) is
automatic once you’ve been granted
Homestead.
More questions?
Drop me an
or visit the “Frequently Asked
Questions” section of the Lee County
Property Appraiser’s website:
www.leepa.org
Appraised
Value, also referred to as
assessed value, fair market value or
just value, is determined each year by
the city
Property Appraiserand is based on factors such as:
Improvements to the property from
one year to the next (ie, the
addition of a swimming pool, etc.)
Possible negative affects caused by
damage (ie, a fire or storm, etc.)
Market value (as reflected in
transactions between sellers and
buyers)
Local economy and forces of supply
and demand
The
Millage Rate
is determined by each
taxing authority
in Lee County, based on the amount of
tax dollars necessary to fund their
annual budget.
Millage rates are in dollars per
thousand of assessed value; that is why
we need to divide by 1,000 after
multiplying the appraised value by the
millage rate when calculating the
property tax amount (as in the sample
equation).
A
tax authority (also known as tax district)
has the power to assess property
owners annually in order to meet its
expenditures for the public good. (Each
assessment is based on the amount of
revenue needed to provide such services
as law enforcement, fire protection,
schools and other public services.)